Home Buddies – Home Ownership Coach – Houston, Texas

How Does the Foreclosure Process Work?

Foreclosure Defined

A foreclosure is the legal proceedings initiated by a creditor (the mortgage company) to repossess the collateral (the house) for a loan (the mortgage) that is in default (unpaid principle and/or interest payments).

The Foreclosure Process

These are the stages and it gives many opportunities to save the home from foreclosure. The process varies from state to state but this is the general timeline.

The first stage begins after a grace period when the first payment is missed. The grace period is usually the 15-day period that a payment can be made after it’s due without being considered late. As a rule of thumb (and it should not be counted on), if my payment is due on the first of the month, I would be considered behind on payments 45 days after the missed payment was actually due. This means that the outrageous attorney’s fees are not yet billed to you.

Then, the mortgage company orders a trustee to record a Notice of Default (NOD) at the County Recorder’s Office. This now means an attorney is involved and the charges will now be reflected in letters from your mortgage company.  This puts the borrower on notice that he or she is facing foreclosure and starts a Reinstatement Period or Acceleration Period that typically runs until a few days before the home is auctioned off.

If the loan isn’t reinstated within three months (again, rule of thumb, do not count on it), a foreclosure sale date is established. The homeowner will receive a Notice of Sale, which is also posted on the property and recorded at the County Recorder’s Office in the county where the property is located. Finally, this Notice of Sale is also published in newspapers local to the county in question over a three-week period.

The foreclosure Trustee Sale (Auction) typically occurs on the steps of the county courthouse in which the property is located. The time and location of this sale are designated in the Notice of Sale. In Texas, this is the first Tuesday of every month. At the Trustee Sale, the property is auctioned in public to the highest bidder.

How long do I have after the foreclosure auction?

Here in Texas the eviction process starts immediately but it is not a one day process. It can be another 2 weeks to a month (expect 2 weeks rather than a month) between the sale date and the eviction date. There are some other possible outcomes here but this is a good rule of thumb.

Here is the reason. The bank now has to begin another legal process. They first have to ask the court for possession. Then the court will have to confirm the sale. Then the court will order the county sheriff to evict the homeowners and change the locks. All of this can take about 2 weeks which at least gives some time to plan what to do next.

Cliff Pape
Home-Buddies
(888)933-0332

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